Debt Collection Scam Aims at NZ Law Firms.


An older type of cheque fraud has resurfaced and is now targeting law firms. This time it involves bogus debt collection services which will inevitably lead to payments before finding out that the cheque for the collected debt bounced. It is not too hard to imagune how a similar tactic could be used to defraud other businesses.

The scam whereby a seemingly genuine foreign company solicits a law practice to collect debts on its behalf has caught out at least one New Zealand law firm.The NZLS has already warned twice about the scam. Anecdotal evidence indicates that those warnings have had some effect, though only just in time in some cases. The scam involves law practices being approached by email to receive money from a New Zealand-based debtor. The law practice agrees a retainer to undertake the debt collection and later is told the debtor has agreed to pay up. A cheque from a reputable bank is received and deposited in the trust account. The ‘client’ then pressures staff members to forward the funds, which are sent, minus the retainer, after which the cheque bounces. The approach may appear to be genuine in that it purports to be on behalf of a well-established company. However, an actual approach directly to the company can indicate that it knows nothing of the email author, e.g. the emails are forged. Approaches that the NZLS has heard of have involved amounts ranging from approximately $150,000 to over $350,000.

Australian firms are being similarly targeted and it is understood that at least one mid-sized firm in New South Wales has fallen for the scam, reports the www.thenewlawyer.com.au website.

Source: LawTalk 738, 28 September 2009

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